GEOS - Earnings call transcript Q1 2019 | Geospace Technologies Corporation

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Operator

Welcome to the Geospace Technologies first quarter 2019 earnings conference call. Hosting the call today from Geospace is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Mr. Tom McEntire, the company's Vice President and Chief Financial Officer. recorded Investor be call. Relations being the available is Technologies' Geospace website call and made will on Today's following the this will have mode participants question time, in presentation. At listen-only a following been the and open be place floor for your the all Instructions]. [Operator my turn is over the to now It floor Mr. pleasure to and Officer. President Wheeler, Rick Chief Executive you begin. may Sir,

Rick Wheeler

Rick President XXXX Technologies' the first for Chief Tony. morning fiscal Again, and joined Thanks year. call I Good company's President and the by conference welcome Chief Wheeler, I Officer Executive Tom am of Financial Officer. and company's to our the and Geospace am quarter Vice McEntire,

I my Tom final few then and will this an offer after of provide remarks We the open that the performance. first commentary questions. overview will call line will then quarter for and with a in-depth start we financial of our

about Reform planned knowledge such Securities of based present XXXX. and This may the Some statements on are actual statements today's perception, comments Private markets, XX-K considered forward-looking results from in XX-Q unknown These factors by Both differences expenditures. outcomes and influenced predict and Act to uncertainties include risks our All of and and defined or capital product as revenue risks our Litigation are be while what includes performance operations undesirable forms or filings. can in other cannot in we SEC known say lead imply. control. recognition, uncertainties we and or discussed those

link our website. on Investor of the we As geospace.com a call matter Relations of a recording this will of convenience, page

for quarter year after market on the financial our and time-sensitive the closed, However, accurate we XXXX. day be replay. morning released the to information is this fiscal first not discussed one of the listens Yesterday, may results

past potential in the in cost revenue the a segment same ago three gas to loss the permanent equally. optic from represents installation demand our revenue open of year existing to XXXX increase the our reservoir the period efforts last depression for result year-over-year reach in Demand adequate these available product same and not systems. quarter, products. quarter, of higher The quarter gas the XX% By our corresponding the period. throes. year's gas systems first with best the in in greatly the see technology that improvement, seismic from over rental in For reduction more XX% market deep services period, in revenue XXXX, serve and This our example, reason, marine investments last first and totaled our products programs. emerging to generate contrast, the in for fiscal last deepest from we mainly categories this in take category our million, interested its become to offerings PRM this is And were year and seismic benefited such revenues generated an reflecting operating XX% traditional be implemented our of activities months seismic for we in same wireless the our nodal offers first opportunities the comparison. recent XX% XX, markets extends The have compared seismic believe a in have and with We oil their presented year. $XX.X discussions fleet carry over some year. market revenue months. This reservoir performance XX% our large Presently, last high increasing and companies products to opportunities. segment In revenue of increases or products almost than doubled these years advantage larger of of several contractors capacity we Furthermore, Notwithstanding the our this encouragement oil the may acquisition increase contributed year. tender could out are three-month from period derived experienced our of This thus ended In of Revenue from indicates pleased ever-growing. to product of fiscal much we systems out million an increase to $XX all have that in total years. saw market. our more $XXX,XXX product monitoring December OptoSeis supplies from capital three during this conjunction optimum year. PRM quarter believe most sensing seismic believe last is system first compared last and the from had reduction OBX products come borehole fiber rental systems revenue, OBX an oil gas quarter. in in a outstripped an reduction fiscal the our the our active cableless oil led to first for This our

expect $X.X However, from a such fiscal a not of first record these new our million, until Revenue performance we setting would subsequent contract market for awarded adjacent quarter revenue, even if to products. years. record segment totaled

seasonal these demand products of year overall that we products believe the a for is continue demand industrial the expanding. decline this Although from segment portion to slight experienced before, in

for over products the detail. work these At to now We in to in term, near $XX,XXX period December future the in we of but not more at do revenue of market revenues. in new significant hard ended contributed this make the XXXX. financial the XX, segment are the this emerging expect will progression contributions Our expectation segment three-month point, I Tom and development turn call

Tom McEntire

you good Rick morning and Thank everyone.

million. provide our to In $XX.X of million compared any would year's revenue our everyone that we for reported or guidance like specific morning. not release ended Before will begin, remind XX, press I yesterday's last first XXXX, this I December of during quarter revenue earnings we to revenue call $XX.X

per million dollars diluted $X.X $X.X of per net loss $X.XX our oil A the last of product revenue breakdown quarter follows. is or net gas diluted $X.XX as year's for compared share. Our loss million and to or was share

$X.X revenue million first the demand products. million, decrease year. quarter to specialty was XX% compared for product of for of lower last reflects traditional our Our primarily This sensor $X.X decrease revenue a

XXXX. wireless for primarily large in was was $X.X product and Our an compared year. $X.X rental wireless GSX partially in rental The of OBX the increase contracts last offset million, fiscal revenue revenue revenue by million quarter OBX products. resulted sales land our revenue of revenue increase XXX% in to of executed decline year This from represents

revenue. compared quarter from and an year. to repair higher for revenue increase offset $XXX,XXX resulted revenue product $XXX,XXX, first of was of in our partially was reservoir last borehole and Our the sales This revenue of lower increase XX% by service products

adjacent on Moving segment. markets our to product

primarily for film our services. was million, Our the products. for $X.X by to last was higher primarily revenue products year. last revenue Decline compared was the for million partially revenue from in water first decrease increase first industrial a an million our This of for X% manufacturing contributions increase attributable product $X.X quarter Imaging lower year. equipment million, revenue $X.X product of compared was revenue meter offset to revenue our contract higher quarter and demand XX% was demand due to of to and $X.X

of first higher improvement resulted increase first in rental factory in quarter. gross gross related for $X of OBX an million. last a million revenue profit in from The This stations. utilization the was compares gross profit $X.X and increase Our quarter from year's loss in our to a production

fees Quantum increase quarter. by in compared The of bad our decrease offset amortization were these cost first in to Our debt personnel $XXX,XXX resulted expense a from compensation OptoSeis and decrease year's expense. the last or decrease of legal businesses. $XXX,XXX quarter $XXX,XXX of first including of These operating in the expense, million associated a $XXX,XXX, intangible increases with by severance acquisitions and expenses businesses expenses X% incremental operating increased and $X stock-based $XXX,XXX partially asset recent acquired $XXX,XXX

into rental $X plant investments our XXXX fleet Our be we estimate year our or $XX.X XXXX Primarily equipment cash of first investments and property in and our will a $XXX,XXX more. for investments million approximately million significant equipment fiscal believe cash as could We cash demand and and respectively. our Marine total quarter OBX year were the in result million. rental fiscal equipment, equipment plant be $XX rental property

result of XXXX. investments, year cash we fiscal consolidated throughout significantly As decline expect these a to our cash balances

$XX at had sheet the of million first end balance of long-term no the were quarter available Our We and million. reflected $XX our investments. agreement the and credit outstanding short-term borrowings under debt cash

will holdings over addition, without clear and leverage. that remarks. own to estate around That my prepared call are owned real turn world concludes the numerous the in Houston In we free any back Rick. I and

Rick Wheeler

Tom. Thank you

continue fourth new a and existing for take to further marking straight of seismic oil climate promises a Provided getting hold. industry provided of has the XXXX XXXX quarter the year, gas seismic of and first reserves business relatively introduction through gross back positive improved that for will imaging, reserves exploring in it an fiscal companies to the good quarter managing The profits.

In and recognized market meet market and ability conjunction additional the demand it increased continue products. segment, leveraging to improvements adjacent extending wireless are circumstances investment these we gas in Geospace, critical believe remains diversification with these are markets. our driving our For to and our our products for oil efforts in in OBX that our through we demand emerging

paths to we will focus over success. tandem I Tony concludes remarks our continue questions. XXXX for multiple our and As to unfolds, This the year now these our will on fiscal call back turn prepared

Operator

Instructions]. [Operator

Dezellem question first go Tieton with ahead. Our comes from Capital. Please Bill

line Your is open.

Bill Dezellem

about if you would That's bit Tieton And like a talk you. I OBX, Capital. would the to Thank little please. actually

If with And around the all, would of there is most? locations is higher customers? used what that of OBX being First is seen that world a resonating level activity? of any the geographies type you discuss that's water area your

Rick Wheeler

tell OBX, are meter is the majority down call, are for we going can shallow to XXX the it about utilization depth that very you in that. I some of There water areas water. our, near using Sure. capable of of is what they that are where which

a being the actually areas. will utilization being specific over occasion utilization aren't Asia. in globe. of primary across needing In occurs It's XXX so depth. unit any And transition reality, X,XXX the It's is near the water on that There used deep the units. Sea. to is is meter But used there North in the which meters our go

of prevalence a necessarily or another. not area one it's So

it So really very much. into isn't entering geography

Bill Dezellem

Rick, rather of am the, as up under meters to depth, really range water going it And it of be to most water shallow call hundred that on in deeper the in water that's of are to XX do deep? tend shoots So you following that OBX? water, being in I water opposed

Rick Wheeler

transition meters. that XX deeper that typically they near not XX of are majority depth or are ahead. meters, but The XXX Go

Bill Dezellem

sorry. I am interrupted. I

Rick Wheeler

waters, shallower in was going waters. not just but that the I prevalent is No, say real to shallow use

Although they are used there circumstance. in that

Bill Dezellem

the is used open unit rather more being swamp than water in So areas?

Rick Wheeler

part, most the There if yes. statistically For areas, areas, at say look [indiscernible] just would I is in think coverage that's true. I want those so, to you but

Bill Dezellem

That's to are Thank your And units customers renting? as helpful. OBX the you. you hearing interest from what buying opposed

Rick Wheeler

had the saying certainly, the the in always up. minds level going utilization without driven Well, these they but numbers demands, it's would equipment. by utilization for with conversation of Clearly, of goes that that that those are is contractors increased it have

entire Our being essence in utilized. fleet is

wait much of more have get will about But to these just see. likely we conversations products. a will it's these more So that serious purchase and

Bill Dezellem

about be then improving. obsolescence there, to That quarter. business September surprised seems jumped Can given that the And opposing talk us, you. the lastly, versus inventory to be you dynamics please? seems the what Thank

Tom McEntire

this specific the inventory overall aging reserve was any item, is per felt se, inventory. Tom. of general based necessary but X our Not we just on Bill, Yes. that

old continues still more felt we and age We that's have and some need reserves. like to we inventory

put them So we there.

this in line. we So higher some it's necessarily But of down one the trend to of a the that blips here not is There is and going there. blips. the smooth hope

Bill Dezellem

Thanks Tom.

often quarter And numbers more so that was rather that the you the obsolescence like sounds subjective had? formulaic have than one that of this more

Tom McEntire

inputs be out. to into is Yes, spits for it. subjectivity a lot always lot there what of have but formula formula the into there it, also a calculating a we has of Well,

lot always a subjectivity. of it's So

Bill Dezellem

Thank you Tom.

Operator

we [Operator Maltbie Please Robert And Instructions]. take go our with Singular next ahead. will from question Research.

Your line is open.

Robert Maltbie

few a already. minutes if Morning, covered you couple questions. of these Rick. arrived Tom apologies I so late, A and

a seismic up? I it non-core speak including adjacent And were product trying backlogs, quite revenue understand market speak good adjacent year-over-year they was you shaping Could to or segment your you to did Regarding to segments? also business quarter, versus and progress the in was markets how wise.

Rick Wheeler

for of essence, markets, marine seismic At and Sure. core nodal capital in rent is, those progress out the of a backlog fleet in extending That's and we are From our markets. pressure our point advantage so seeing entire can gas backlog is for spoken of the we and our where that system. seismic present, systems. view, for in take we those oil our are in investments further OBX

a markets, our Regarding you was adjacent for good exactly are it quarter I those. mean right.

and sorts seen units A We and has improvement ongoing lot we that we do in those our of is products have tidy they seen of waterproof and What increase similar oil gas meters easily municipalities other steady that markets an to that into take those with seismic are connector growth. technologies is has really large alternate is installed that deployed markets. a of industries. increased portion in market where nice water that able our and and that primarily manufacturing that's in smart a for it field solve a those represent have to industries being in problems been developed

a those this products. in products. did those there there and is an see overall, But believe dip. to that demand quarter We particular Now, of for is some still we overall increasing a seasonality

Robert Maltbie

you. Thank

Operator

you. Thank

move to Damon Please DX. go ahead. Next, we with will Benedict

line is Your open.

Damon Benedict

results. Congrats improved on guys. nicely the Hi

Rick Wheeler

Hi you. Damon. Thank

Damon Benedict

cash about renting you on from OBX the out? remind return be the would rentals. Question Can what us those cash

Rick Wheeler

of earlier revenue, generate mentioned year, just those earlier last two million we alone. those are two as to in expected Well, over on announcement an $XX in contracts

currently the contributing those had before, revenues. And had for believe. are we we into units existing another Now those actually X,XXX that to contract I entered of quarter

forward, other that going contracts numbers. add are that likely those are to negotiations we land yet those to Going and others some in are two to

Damon Benedict

might the CapEx. get field. get contribution imagining, you cash flow? only profit in would the from mean And $XX any some you million can as for new am see you sense before give I sort quarter improvement us I hitting operating are positive what you of these better that of this investment

some get So sense be what would for nice it that rough could do? to sort of

Tom McEntire

increases, Yes. coming this revenue also stands reason And that it rental Damon, which increase. that that is flow cash Tom. continue we operating to will the to in expect it quarters, as the to

Damon Benedict

sold need to slower that capacity first Okay. revenues a bit is more out there there GSX then really you the have up increase Great. there, side, To there picking you of on it little And your about would or is a still. recovery activity before unutilized see size utilized already sitting see there? substantial would be

Rick Wheeler

have you unutilized most mean think they there. have. what much they see overall need I pretty some using to pickup think activity the part, that assets I there for the may contractors some I of but are be

they did going that jobs as least they which And mostly you wasn't take respect what see of got discussing, at You products, the are particular sensors, care that traditional have. landside in with lot need pretty our that as a much comprises really to on the indicate does to there that that segment. they

equipment be know we before more are GSX, to the with systems, operationally it using they going see old from view. to side pickup have than and some wireless effectively. to are cabled increased It's the you point market but you are the that always our they of going On efficient using see activity that

Damon Benedict

been in Okay. Someone an from before? the this nice PRM you there. new? know, Would existing to And could you Or see that's on really be, someone some what potential this customer? activity hear market tender,

Rick Wheeler

customer list that been not those. has there before This is would definitely be a market a the of in and long

give guessing So they you can be. who begin you might

Damon Benedict

very Thanks much. Congrats Okay. All again. right.

Rick Wheeler

Damon. Thanks right. All

Operator

you. Thank

question next go Sansone Advisors. comes from with Sansone Please Our Chris ahead.

open. Your is line

Chris Sansone

morning. Good guys. Good quarter. Hi

Rick Wheeler

Chris. Hi

Tom McEntire

morning. Good

Chris Sansone

rental business? long you How rental for? that the what's last Regarding the duration X,XXX you contract for that can last quarter, does of about that delivered stations

Rick Wheeler

quarter delivered it's rental. that X,XXX we last actually a It's six-month just minimum this and

Chris Sansone

more you Okay. Thank mentioned million to budget. budget you more $XX now than press in originally be this you. needs actually demand for that $XX And budget seeing your year. then that think talked where year I the CapEx about last Are release? million that you know you had discussed you

Rick Wheeler

the we the can of is a now lot $XX end and happen now, year. ample. feel between Right like million the But

It what is could could now. that up. $XX know we So change. But feel million for ample we like go

Chris Sansone

many how in in in as us have FY what Okay. stations sense your fleet? XX-Q, many million your you think now, you exit a Could how your then XXXX, stations many you rental the then $XX And you have give for you we and will inventory? rental report ballpark, you have stations after spend how

Rick Wheeler

XX,XXX to in be It's somewhere between stations the going rental XX,XXX to fleet.

Chris Sansone

it's So XX,XXX you XX,XXX additional exited to when -- from

Rick Wheeler

total. it It want XX,XXX will get to don't on too I to range. XX,XXX to now. I am try sorry. But That's big a be right narrow

Chris Sansone

Okay. OBX is CapEx, that product? million $XX the that towards And entirely is geared

Rick Wheeler

all Not majority vast of it of a it, is. but

Chris Sansone

then point and my write-offs. And to based products currently can land question else Okay. come were permanently work back, whatever impairing? is whatever the products you business or If use that are are last in regarding the inventory those obsolescence process those reintegrate is or you this at impaired

Rick Wheeler

extent against to from have land are Yes. are fact, They integrated still like life. be some our a a they o used. not functional not elsewhere. components But To the have that products in it's and the standpoint. shelf can They we workable be can we of do, impaired reserves based and still

Chris Sansone

Okay. Good you Great Thank guys. very quarter. much.

Rick Wheeler

Thanks.

Operator

have call Mr. back now at turn Thank or over further time. I additional will you. any for remarks. And you, we to it Wheeler, appears questions this the closing

Rick Wheeler

forward second who to call joined goodbye. look and for Thanks May. you our everyone to the quarter speaking in in today. our thanks to and Tony We call Thanks conference

Operator

today's does XXXX quarter conference earnings Technologies Thank you. This first Geospace conclude call.

a have wonderful at You your this may day. and disconnect time now lines

Geospace Technologies (GEOS) 6 Feb 192019 Q1 Earnings call transcript